CPS Technologies Corp. 10-Q Summary
Business Context and Reporting Period
Ceramics Process Systems Corporation (CPS) designs, develops, and manufactures advanced ceramic and composite products for the electronics and defense industries. This report covers the fiscal quarter ended March 30, 1996. The company operates from a leased facility in Chartley, Massachusetts, as a tenant at will.
Key Financial Metrics
| Metric | Q1 1996 | Q1 1995 |
|---|---|---|
| Total Revenue | $386,482 | $402,795 |
| Net Loss | ($197,683) | ($231,022) |
| Loss Per Share | ($0.03) | ($0.03) |
| Cash Balance (End of Period) | $1,084 | $259,244 |
| Net Cash Used in Operating Activities | ($23,858) | ($220,358) |
| Total Current Liabilities | $2,645,321 | N/A |
| Convertible Notes Payable (Current) | $1,820,000 | N/A |
| Stockholders' Equity (Deficit) | ($2,691,048) | N/A |
Liquidity Note: Current liabilities ($2.65M) significantly exceed current assets ($231K). The company holds only $1,084 in cash as of March 30, 1996.
Material Changes vs. Prior Period
- Revenue: Decreased slightly by approximately $16,000 (4%) compared to the prior year quarter, primarily due to the absence of $2,000 in license agreement revenue.
- Operating Expenses: Decreased by $66,000 to $525,413. This reduction was driven by a $47,000 decrease in payroll costs following personnel reductions in late 1995, alongside lower marketing and insurance expenses.
- Net Loss: Improved by $33,000 to a loss of $197,683, despite a $16,000 increase in other expenses (primarily interest).
- Cash Position: Cash reserves depleted from $32,127 at the start of the quarter to $1,084 at the end, a decrease of $31,043.
- Interest Expense: Increased by $17,000 due to a $450,000 increase in notes payable incurred in the previous fiscal year.
Outlook, Risks, and Management Commentary
Management attributes the slight improvement in financial performance to reduced payroll costs. However, the company faces significant liquidity risks. While operations were financed through working capital for the first four months of 1996, management explicitly states that external financing will be required to support operations for the remainder of the year. There is no assurance that adequate funds will be available or on acceptable terms.
The company is operating as a tenant at will in its Chartley facility. Additionally, the filing indicates the registrant has not filed all required reports during the preceding 12 months, as indicated by the "No" checkmark in the compliance section.
Investor Verification Checklist
- Cash Runway: Verify the company's ability to secure external financing immediately given the $1,084 cash balance and $2.65M in current liabilities.
- Debt Obligations: Confirm the terms and maturity dates of the $1.82M in current convertible notes payable.
- Compliance Status: Investigate the reason for the "No" filing status regarding Section 13 or 15(d) reports for the preceding 12 months.
- Lease Security: Assess the risk associated with operating as a "tenant at will" in the primary production facility.
- Accrued Liabilities: Review the composition of $602,888 in accrued expenses, which includes $277,680 in accrued interest.